Proposition 30 takes narrow lead; Proposition 38 defeated

After initially trailing, Gov. Jerry Brown's measure to raise taxes for schools won comfortably, leading 54 to 46 percent with nearly 95 percent of precincts at least partially counted as of 5 a.m. today.

Proposition 30 will raise sales and income taxes to generate some $6 billion in revenue for the state, much of it going to fund schools. The measure trailed by as much as six points as results were tallied Tuesday evening, but later took a narrow lead.

A margin of about 2 percent at the time was enough for Brown to declare victory Tuesday night.

"I think (California is) the only place in America where a state actually said let's raise our taxes for our kids, for our schools, for our California dream," Brown said in a speech to supporters. "I want to acknowledge and recognize and thank everyone who was part of that."

Another proposal to raise taxes for education, Proposition 38, backed by civil rights attorney and education reformer Molly Munger, was rejected by more than 72 percent of voters as of early today. To become law, it would have had to not only been supported by a majority of voters, but exceed the count for Prop. 30.

Munger released a statement Tuesday thanking supporters.

"Transformational change takes time and we are committed to staying the course until our state truly does tackle this school-funding crisis," Munger said.

"So the fight will continue. Whether we are back at the ballot, in Sacramento working on legislation, or finding other new, innovative ways to tackle this incredibly important issue, you can count on us to be there."

The statewide contest between Propositions 30 and 38 was among the most heated and expensive on the November ballot in a battle to raise taxes to salvage California's struggling public school system.

Opponents blasted both measures for trying to raise taxes on individuals and small businesses as the state struggles to recover from the recession. Critics of Prop. 30 also accused lawmakers of trying to blackmail voters by threatening to slash school funding if the tax doesn't pass, rather than making other cuts to the state's $91.3 billion budget.

Brown led the charge for Proposition 30, declaring at campaign rallies and in TV commercials that the proposed constitutional amendment would have averted catastrophic cuts to school districts, community colleges and the state's universities and restore promised funding to local campuses.

It was designed to generate $6 billion annually by increasing the income tax rate on wages of more than $250,000 for the next seven years and raising the sales tax by a quarter percent for four years.

If defeated, it would have triggered $5.4 billion in cuts to K-12 schools, about $441 per student, and community colleges. An additional $250 million would be slashed from both the University of California and Cal State systems.

Local districts would have coped with the trigger cuts by shortening their instructional calendars from 175 to 160 days, tying California with Colorado for the shortest school year in the nation. Community colleges would have dropped hundreds of classes, and state universities would have raised tuition.

The cuts would have taken effect in 2012-13 and snowballed in future years, experts said.

Munger championed Proposition 38, which would have generated about $10 billion annually for schools and early-childhood centers by raising the income tax rate on most Californians for 12 years.

While Munger's proposal would have generated more money for schools, it wouldn't have taken effect until the 2013-14 school year.

The two measures were not only pitted against opponents but against each other; if both passed, only the one with the most votes would have taken effect.

With the threat of immediate cuts to education, organized labor came together to support Proposition 30. Of the $69.5 million donated, about $16 million came from the California Teachers Association and American Federation of Teachers, while $11.5 million was contributed by the Service Employees International Union.

Opponents of the measure included Molly Munger's half-brother, Charles Munger Jr., who contributed $35 million of the $53.4 million raised. An additional $11 million came from Arizona-based Americans for Responsible Leadership, with funds funneled through two conservative nonprofit groups.

Munger herself bankrolled Proposition 38, providing the $2 million to gather signatures to put the measure on the ballot and pouring in $44 million to support its passage. Her husband, Stephen English, also a civil rights attorney, donated more than $3 million. The Mungers are the children of billionaire Charlie Munger Sr., the vice chairman of Warren Buffett's Berkshire Hathaway Corp.